Aviation Safety Resources - Growth Capital

Min. Invest
$50,000
Pre-Money Valuation
$7,000,000
Implied Market Multiple
6x
Progress - 0% Pledged
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Company Overview

Led by the former CEO of the world’s leader in ballistic parachute aircraft recovery systems, Aviation Safety Resources ("ASR" or the "Company") designs, tests and produces emergency parachute recovery systems for aircraft, drawing the analogy to having airbags in flying cars. ASR’s Whole Aircraft Recovery Parachute System (or WARPS) is designed to safely bring down the entire aircraft and its occupants in the event of an in-air emergency, mitigating impact damage to aircraft and occupants. The Company’s patented technology and intellectual property include the design, configuration, integration, deployment, and structural implementation necessary to integrate WARPS, essential for the safe operation of Urban Air Mobility (or UAM) vehicles and aircraft. (Click here to view a demo of ASR's WARPS product.)

Why you should invest

  • First to market
  • Superior product performance
  • Experienced management team of industry experts
  • Significant customer traction and order backlog
  • Qualified Opportunity Zone location

 

ASR is actively seeking investors and strategic partners who share their vision to advance the next generation of aviation safety. The Company is currently seeking up to $1.5 million from investors, which funds are expected to be matched under the Department of Defense and the State of Kentucky Small Business Innovation Research (SBIR) programs. By capitalizing on innovative partnerships, ASR will leverage the newest technological advances, regulatory changes, market conditions and advanced capabilities to make safety an integral part of existing and new modes of manned and unmanned flight.

Form of Security Common Equity
Purpose of Funds Growth and Working Capital
Offering Size $1,500,000

Market Opportunity

ASR’s vision is to bring a new dimension of safety to personal transportation. With this goal in mind, the Company is working to commercialize a range of products and develop new, innovative solutions to address unparalleled opportunities in the aviation and Urban Air Mobility markets.

ASR has developed industry leading, cost effective solutions for traditional commercial and UAM markets, addressing the need for innovative, revolutionary solutions presented by the challenges associated with Vertical Take-Off and Landing (VTOL).

ASR’s technology is the next generation in recovery systems for all market segments; experimental/kit aircraft, light sport aircraft, general aviation (GA) aircraft and UAM.

ASR is the first to market with a system specifically designed for the UAM market. The system uses its patented technology, partly based on ejection seat and first-stage rocket booster recovery technologies, to recover a vehicle in a vertical take-off or landing mode (including VTOL and electric eVTOL) at around 100-ft. This technology offers an extraordinary advantage over existing systems that rely on altitude to inflate a single canopy parachute. In contrast, the ASR system is not dependent on altitude loss to inflate the canopies and utilizes multiple parachutes for an additional layer of safety. The end result is a more reliable system that works efficiently, even in the vertical take-off and landing configuration.

Given ASR's extraordinary market position, the emerging markets for VTOL, eVTOL and UAM are especially promising for future growth as ASR is already considered an integral part of the supply chain for the U.S. Air Force Agility Prime program.

Investment Highlights

First to market: In a market with few competitors and high barriers to entry, ASR is in an enviable and competitively advantageous position given its viability and product readiness for deployment in a rapidly emerging market.

Industry Leading Experts: ASR’s management team combines the experience and knowledge of experts in all key areas of aviation safety. ASR’s Chief Executive Officer, Larry Williams, is the former CEO of BRS Aerospace, the dominant player in the WARPS market.

Superior Performance: The ASR WARPS system is 20% lighter, requires 40% less volume, has about 10% lower acquisition cost and can be deployed faster than comparable products.

Sustainable Product Life: Reduced total cost of ownership as the ASR product requires repacking (servicing) every 15-years compared to the competition’s 6-year repack cycle.

Customer Traction: ASR recently secured three key customer contracts, adding to an existing and healthy customer pipeline, building further momentum as one of Agility Prime's top eVTOL supply chain contractors for safety/UTM (Unmanned Aircraft System Traffic Management).

Established Key Partnerships: ASR has established partnerships with recognized experts in their respective fields, such as the U.S. Air Force, NASA and other  globally recognized, leading organizations who collaborate and coordinate with ASR on items like product testing, to help expand upon key areas of their business. 

Investor Funds Match: Through the U.S. Air Force Small Business Innovative Research (SBIR) program, ASR can have the current investor funds matched on a 1:1 basis, for up to $1.0 million; and the State of Kentucky has a program to match up to another $500K per year for two years.

Profitability in Sight: ASR projects reaching profitability by fiscal year 2022 while building upon their current revenue streams, including a combination of new and recurring revenues from New Built System Sales, Recurring System Service Revenues, and Parts and Engineering Services Revenues.

Opportunity Zone: ASR is located in one of Kentucky’s Qualified Opportunity Zones that can offer significant tax benefits such as tax deferral, a step-up in basis, and, possibly, the permanent exclusion of taxable income on investors' monies.

Key Element of Industry: Safety is deemed a very high priority in the emerging UAM market. During the recent U.S. Air Force-sponsored Public Private industry conference, Agility Prime, safety was a high priority and became one of the most talked about topics. In her speech at the launch event, the U.S Secretary of Transportation, Elaine L. Chao, highlighted that “safety and public acceptance will be key to full development and deployment” of eVTOL and UAM.

Substantial Insider Capital Commitment to Date: The Company has raised $1,000,000 of capital to date. Virtually all the capital has come from existing management; as a result, the team’s incentives are highly aligned with those of existing and new investors.

Patents: ASR’s products are protected by several patents and the Company is currently seeking to register additional patents and design registrations.

Financial Forecast

Currently, ASR’s revenue streams include a combination of new and recurring revenues from New Built System Sales, Recurring System Service Revenues, and Parts and Engineering Services Revenues. With a relatively low cash burn rate, ASR expects to become cash flow positive by 2022. After an initial ramp up of production capacity and hiring efforts, ASR is projecting to generate over $50 million in revenues by 2025.

Sources & Uses

By raising $1.5 million from new investors, ASR expects to secure an additional $2 million in matched funds from the U.S Air Force and the State of Kentucky (for a total of $3.5 million in proceeds), providing investors with additional financial and operating leverage on their invested funds and sufficient funding for the foreseeable future.

Notes:                                                                                                                                                     

  1. Through the U.S. Air Force Small Business Innovative Research (SBIR) program, ASR can have the current investor funds matched on a 1:1 basis for up to $1.0 million
  2. The State of Kentucky can match up to $500,000 of investor funds per year for two years. The matching funds from both the U.S. Air Force and the State of Kentucky reflect the Company's current expectatons but cannot be guaranteed

 

ASR has identified the following areas within which it plans to deploy approximately $1 million of the investor funds with the balance of funds being used for general working capital purposes.



Opportunity Zone Benefits

  1. A temporary deferral of inclusion in taxable income for capital gains reinvested in an Opportunity Fund
  2. A step-up in basis reinvested in an Opportunity Fund
  3. A permanent exclusion from taxable income on capital gains from the sale or exchange of an investment in an Opportunity Fund with a holding period of at least ten years

A Qualified Opportunity Zone (QOZ) is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.  Localities qualify as QOZs if they have been nominated for that designation by a state, the District of Columbia, or a U.S. territory and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service (IRS).

Industry Overview

JP Morgan Chase predicts that the Urban Air Mobility market could grow to as much as $1.5 trillion by 2040. Other organizations, ranging from NASA to Bloomberg News, predict the market size to be between $615 billion and $3 trillion by the same date. There are currently 250+ registered designs for electric and hybrid-electric vertical takeoff and landing (eVTOL) concepts, including Boeing, Airbus, Embraer and Bell Helicopter.

The WARPS market is dominated by one primary player at this time, BRS Aerospace. With ASR’s Soteria product, which is 20% lighter, requires 40% less volume and is about 10% lower in acquisition costs than competitive solutions (see product quadrant graphic below), ASR is in the unique position to gain significant share in a market with currently limited competition.

 

 

ASR’s experience in developing WARPS and its new generation Xtreme Rapid Deployment system, which is tailored to the emerging UAM market, combined with seasoned executive management and industry leadership experience, provides ASR with a distinct competitive advantage when compared to other market entrants.

As one of the industry’s front runners in the UAM sector, Uber Technologies Inc. has committed to UAM trial deployments in Dallas, Los Angeles and Melbourne by 2023. Additionally, several other UAM and eVTOL companies have recently raised significant amounts of funding including, among others, the following:

  • Joby: $720 million (Toyota & Others)
  • Lilium: $375 million (former Skype and Twitter co-founders, Baillie Gifford, Tencent at a $1+ billion valuation)
  • Volocopter: $132 million (Daimler, DB Schenker, Geely and TransLink Capital)
  • eHANG: $60 million (Microsoft)
  • Kittyhawk/Zee Aero: $100 million (Larry Page)

Due to long development cycles that design and testing of complex recovery systems require, the barriers to entry for competitors is high. Today, ASR’s recovery system is the only viable solution for the VTOL market, which allows ASR to have a first-mover advantage and, potentially, become one of the industry’s more formidable competitors going forward.

The Company estimates its addressable market to be approximately $71 million in the medium-term. ASR anticipates that the Company’s market share can represent at least 20% within five years, including a healthy participation outside of the emerging market segments for VTOL and eVTOL vehicles. The table below shows the projected addressable market, and ASR’s market share, in more detail.


Competition Overview

ASR operates in a market that has been dominated by one domestic player, BRS Aerospace. ASR believes that given its proprietary product offering and the evolution of electric vertical takeoff and landing, electric propulsion, and Urban Air Mobility vehicles, development opportunities will allow for new, more innovative technology than that currently offered by the competition. The concepts discussed in this section are intended to provide an overview of the spectrum of ongoing work and to highlight the most significant and most-commonly cited competitors.

ASR believes BRS Aerospace is the only manufacturer of whole-aircraft emergency parachute systems for certified general aviation aircraft and it is the only U.S.-based manufacturer in the domestic recreational aviation market (sport/experimental/Light Sport Aircraft). ASR is aware of four foreign competitors in the international recreational aviation market and the Light Sport Aircraft (or LSA) market. One of these companies has entered the U.S. market as a standard component on a newly designed LSA airplane. While data is not publicly available, ASR believes these competitors are significantly smaller than BRS Aerospace.

Competition for the recreational market is strong internationally, where purchase decisions are mainly based on price. ASR estimates BRS Aerospace’s current market share to be approximately 63% of the domestic market in the sport segment, which consists of the recreational, experimental and LSA markets, and approximately 40% of the international market in the sport segment.

With its lighter weight, smaller and more cost-effective product, ASR is well positioned to offer competitive prices in the domestic and international markets. ASR also believes that it has a significant first-mover advantage over potential competitors given that it can take several years to overcome the regulatory and technical challenges of developing a new product and receiving approval.

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Investor Tutorial

CERTAIN INFORMATION REGARDING THIS OFFERING

THESE UNITS ARE BEING OFFERED WITHOUT REGISTRATION UNDER ANY FEDERAL OR STATE SECURITIES LAWS, BUT ARE BEING OFFERED UNDER AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER COMPARABLE EXEMPTIONS UNDER VARIOUS STATE SECURITIES LAWS. HOWEVER, THE SECURITIES AND EXCHANGE COMMISSION (“COMMISSION”) HAS NOT DETERMINED THAT THESE UNITS ARE EXEMPT FROM REGISTRATION. THESE UNITS HAVE NOT BEEN REVIEWED, APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY, ADEQUACY, COMPLETENESS OR MERITS OF THIS MEMORANDUM, AND ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL TO, OR A SOLICITATION OF AN OFFER TO BUY FROM, NOR SHALL ANY OF THE UNITS BE OFFERED OR SOLD TO, ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER, SOLICITATION, PURCHASE, OR SALE IS UNLAWFUL OR UNAUTHORIZED UNDER THE SECURITIES LAWS OF SUCH JURISDICTION.

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September 29 2020

Confidential Offering Memorandum: Aviation Safety Resources

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